Working in Public and Private Firms

36 Pages Posted: 26 Mar 2001

See all articles by Giacomo Corneo

Giacomo Corneo

Free University of Berlin (FUB); Universität Osnabrück - Faculty of Business Administration - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Rafael Rob

University of Pennsylvania - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2001

Abstract

We develop a theoretical framework for comparing the style of work in public and private enterprises. We incorporate "socializing", as an activity that yields utility for workers and affects a firm's output, into a simple multitask model of work organization. In contrast with previous models, we establish the two following results. First, the optimal workers? compensation policy displays a larger incentive intensity in the private firm than in the public firm. Second, labour productivity in the private firm may be higher or lower than in the public firm. Both results fit well with the findings of empirical work.

Keywords: Incentive schemes, privatization, public enterprise

JEL Classification: L32, L33

Suggested Citation

Corneo, Giacomo and Rob, Rafael, Working in Public and Private Firms (March 2001). Available at SSRN: https://ssrn.com/abstract=264414

Giacomo Corneo (Contact Author)

Free University of Berlin (FUB) ( email )

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Universität Osnabrück - Faculty of Business Administration - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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Institute for the Study of Labor (IZA)

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Rafael Rob

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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Philadelphia, PA 19104-6297
United States
215-898-6775 (Phone)
215-573-2057 (Fax)

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